The
landscape of the 2005 General Assembly was much
different than the legislative sessions of recent
years past. The state has run a surplus for two
consecutive years, bringing in $1.5 billion more
than originally budgeted. Talk of deficits is
gone.
Certainly,
the budget surplus is good news.
Virginia’s economy has fully rebounded and seems as
strong as ever.
However, despite notable strides made
toward long-term structural reform, we have not
changed the spending mindset in Richmond.
The
real problem facing our state is the average
annual growth in spending of 8.12 percent between
1997 and 2006. If
this continues, we will face another tax battle in
a couple of years and it will make last year’s
“mud fight” look tame in comparison.
Since
the 1996-98 biennium budget cycle (former Gov. Jim
Gilmore's first budget) the
Commonwealth’s budget has seen a dramatic
increase. In
just 10 years, the budget has increased more than
80 percent—an average of 16 percent each
biennium over this time.
If you take a year by year approach the
budget has more than doubled! At
this rate the biennium budget will reach more than
$110 billion in 2012-1014.
Each
of the last two years the Commonwealth has enjoyed
a surplus. Last
year’s was $324 million and there will be a
surplus of at least $1.2 billion at the end of
this year. A
portion of these surpluses was, by law, channeled
into the rainy day fund and the rest was quickly
gobbled up by additional state spending.
Facing an even larger surplus this year,
new additional spending quickly swallowed the
surplus whole.
To
put it simply, this kind of spending is not
sustainable. Spending
must be controlled.
If not, more and larger tax increases will
be needed to continue to “feed the beast” of
state government.
The
path to fiscal reform is a constitutional limit on
the growth of state spending—commonly known as a
Taxpayers Bill of Rights (TABOR).
Various TABOR like measures have been
introduced in each of the last several legislative
sessions. While
each initiative was unique, they had the same
central tenet—slow down the rate of growth of Virginia’s budget to the rate of
Virginia’s families.
With
surpluses as far as the eye can see the state
desperately needs "fiscal guardrails" to
prevent adding excessively to the base budget.
Unfortunately,
the General Assembly has failed to pass any of the
competing initiatives to limit state spending in a
reasonably responsible fashion.
It hasn’t even allowed the voters an
opportunity to vote on the idea through an
advisory referendum.
Given our state’s constitutional design
we’re several years away from installing
anything. This
will be much too late if we continue to enjoy
surpluses over that time and spend every last
penny growing the state government.
Colorado
has instituted the strongest constitutional
spending limitation—although 26 states have
enacted some variant of a spending limitation.
Furthermore, 25 states have introduced some
form of TABOR—in many cases, this represents
simply shifting toward a stronger limitation than
what is already in place.
In
the 12 years since its passage, Colorado’s prosperity has been boosted.
Better government has been promoted and it
helped Colorado working families by putting $3.4 billion back in
their pockets via tax refunds.
Spending restraint during the 90s boom
protected Colorado from a California-style deficit.
Indeed, had California
implemented TABOR at the same time as Colorado, it would have enjoyed a $90 billion
surplus rather than a $35 billion deficit!
And, of course, Governor Arnold would still
be making movies.
Government
should not and cannot, over an extended period of
time, faster than the families and the communities
that support them. The
time to instill spending restraints is now—while
we enjoy surpluses and are not in crisis mode.
Its time our state leaders got serious
about Virginia’s future and put some restraints on their
addiction to spending.
The
current campaign for governor is an ideal time to
make this issue of government spending a central
part of the debate.
Without firm spending restraints, we are
faced with a pending fiscal crisis not too far
down the road.
--
March 11, 2005
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